In Part 1, we concluded the current global downturn isn’t a repeat of the 2008 global crisis; rather, it has characteristics of three types of recession: liquidity/currency mismatches, the popping of credit-asset bubbles and a business-cycle exhaustion of credit impulse, what I call a credit-demand exhaustion.

Let’s add a potential fourth recessionary impulse: energy. Right now the world’s oil importers are feasting on a 40% decline in the cost of oil, but as Chris and other analysts (Gail Tverberg, Richard Heinberg, and Nate Hagens) have explained, we’re approaching a point where the cost of extracting, processing and distributing oil is rising as the cheap oil has been consumed. Producers need high prices or they will stop producing. But consumers, the vast majority of whom have stagnant incomes, can’t afford high energy costs. Beyond a rather low price point, higher energy costs trigger a recession.

This may not be driving the current downturn, but it looms large in the background. I see the current collapse in oil prices as a head-fake: the sharp drop makes it appear oil is abundant, but this abundance is temporary, not permanent.

Moreover, we aren’t privy to the opinions and machinations within the world’s major central banks, but it’s clear that the U.S. Federal Reserve is diverging from other central banks, which remain accommodative while the Fed raises rates and reduces its balance sheet by $30 billion a month.

Of the four primary central banks—the European Central Bank, the Bank of Japan, the Bank of China and the Fed—why is the Fed the one bank diverging from the other three, despite the appeals of the ECB to remain accommodative?